Mental Accounting, Spousal Control and Intra-Household Communication: Evidence from an Experiment in India

To understand interactions between mental accounting, spousal control and couple’s communication, informed by recent innovations in the fin-tech space, we mimicked practical iterations of income type and spousal monitoring, in a pre-registered lab-in-the-field experiment with 1,008 couples in Kolkata, India. The experimental design was a cross randomisation where, first, for half the sample the female spouse worked for resources and the other half received money as a gift, before allocation decision were made under five different monitoring frameworks that mirror potential iterations in account type: private, private labelled, visible, approval and negotiation. Our findings highlight the importance of female labour market participation and the mental accounting of earned resources. Earned income by wives was allocated to a greater extent to accounts over which she has more control. While no overall effect of workfare on consumption decisions was found, we did find that, for women who have low control over money, earning money induces her to spend more on her personal consumption. Labelling newly acquired resources for household purposes in individual accounts for both wife and husband did not alter expenditure patterns, indicating a failure of the mental accounting of household resources in individual accounts. Spousal visibility of male decision-making ensures they allocate more towards the collective and away from themselves. Conversely, spousal transparency and communication did not alter wives allocation patterns, but such innovations came at a cost for the less empowered: in households where wife has low control over money, or is more risk averse, visibility of her decisions by husband or an approval requirement from her husband for her decisions leads her to allocate more to accounts he has control in. Our findings provide important insights for the design and delivery of social protection programmes, and suggests the existence of potential welfare gains of shared, or joint, financial products for the management of household resources.